UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Commission file number: 333-173751
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FORM 12b-25
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NOTIFICATION OF LATE FILING
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| (Check one): | | ¨ Form 10-K ¨ Form 20-F ¨ Form 11-K x Form 10-Q ¨ Form 10-D ¨ Form N-SAR ¨ Form N-CSR |
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| | | For Period Ended: June 30, 2019 |
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| | | ☐ Transition Report on Form 10-K |
| | | ☐ Transition Report on Form 20-F |
| | | ☐ Transition Report on Form 11-K |
| | | ☐ Transition Report on Form 10-Q |
| | | ☐ Transition Report on Form N-SAR |
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| | | For the Transition Period Ended: |
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Read Instruction (on back page) Before Preparing Form. Please Print or Type. Nothing in this form shall be construed to imply that the Commission has verified any information contained herein.
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If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates: N/A
PART I - REGISTRANT INFORMATION
Alta Mesa Holdings, LP
Full Name of Registrant
N/A
Former Name if Applicable
15021 Katy Freeway, Suite 400
Address of Principal Executive Office (Street and Number)
Houston, Texas 77094
City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate)
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| x | | (a) | | The reason described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense |
| | (b) | | The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date; and |
| | (c) | | The accountant’s statement or other exhibit required by Rule 12b-25(c) has been attached if applicable. |
PART III - NARRATIVE
State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR or the transition report or portion thereof, could not be filed within the prescribed time period.
Alta Mesa Holdings, LP (the “Company”) is finalizing its quarter-end financial statements and related disclosures. The Company has not finalized the financial statements and related information for inclusion in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 (the “Q2 2019 Form 10-Q”) because of the effort being directed toward completing 2018 financial reporting for the Company's parent, Alta Mesa Resources, Inc. Therefore, the Company is unable to file the Q2 2019 Form 10-Q within the prescribed time period without unreasonable effort or expense.
PART IV - OTHER INFORMATION
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| (1) | Name and telephone number of person to contact in regard to this notification |
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| John C. Regan | | | | 281 | | | | 530-0991 |
| (Name) | | | | (Area Code) | | | | (Telephone Number) |
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| (2) | Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s). Yes x No ¨ |
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| (3) | Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof? Yes x No ¨ |
If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.
As discussed in our previous filings with the Commission, the Company was acquired pursuant to a business combination on February 9, 2018. As a result of the business combination, the Company is considered the accounting predecessor to the acquiror and the fair value adjustments of our assets and liabilities recorded by the acquiror as of February 9, 2018 were pushed down to us. Accordingly, the results of operations referenced below for the six months ended June 30, 2018 include both a Successor Period (February 9, 2018 through June 30, 2018) and a Predecessor Period (January 1, 2018 through February 8, 2018).
The Company currently estimates the six months ended June 30, 2019 will result in a net loss of approximately $17 million as compared to a net loss of $72 million for the six months ended June 30, 2018. The primary drivers to the change in net loss are:
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| • | increased production, which created a $46 million increase of production revenue in 2019; |
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| • | reduced realized and unrealized derivative losses of $33 million in 2019; |
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| • | reduced general and administrative costs in 2019 of $37 million due to the absence of costs related to the Business Combination; |
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| • | increased field operating costs, including depreciation, depletion and amortization, of $48 million associated with higher production and increased produced water costs in 2019; |
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| • | increased interest expense of $6 million in 2019 associated with higher debt outstanding; and |
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| • | impairment charges of $7 million in 2019 on our right-of-use operating lease assets following our decision to vacate certain of our office space. |
The Company does not expect to comply with the terms of the Company's amended and restated credit agreement (the "Alta Mesa RBL") through June 2020, and may fail to satisfy the leverage covenant as early as the measurement date of September 30, 2019. The failure to comply with this leverage covenant or other terms set forth in the Alta Mesa RBL would permit the lenders to cease making amounts available under the facility, to require cash collateral for outstanding letters of credit and to exercise other rights under the facility. In addition, the lenders under the Alta Mesa RBL have exercised their ability to make an optional redetermination of the borrowing base ahead of the regular redetermination scheduled in October 2019. Pursuant to this redetermination, the borrowing base was reset to $200 million, effective August 13, 2019. At the time of the redetermination, the Company's outstanding borrowings plus outstanding letters of credit exceeded the redetermined borrowing base by approximately $162.4 million. As provided under the Alta Mesa RBL, the Company will elect to repay the excess utilization in 5 equal monthly installments of $32.5 million, the first of which will be due in September 2019. As of July 31, 2019, the Company had cash on hand of approximately $79.7 million.
As a consequence of either or both reduced operating cash flow or the lowered borrowing base, the Company has limited ability to obtain the capital necessary to conduct its operations at desired levels. The board of managers of the Company's general partner and the Company's financial advisors are evaluating the available financial alternatives, waivers to the covenants or other provisions of the Company’s indebtedness, raising new capital from the private or public markets or taking other actions to address the Company’s capital structure. If the Company is unable to reach an agreement with the Alta Mesa RBL lenders or find acceptable alternative financing, it may lead to an event of default under the Alta Mesa RBL. If an event of default occurs and the Alta Mesa RBL lenders were to accelerate repayment, it may result in an acceleration of the Company's senior notes. The Company has determined that there is substantial doubt about its ability to continue as a going
concern due to these covenant compliance and borrowing base matters as well as other factors previously disclosed in the Company's Form 10-Q for the period ended March 31, 2019.
The financial information set forth herein consists of unaudited results. In addition, the statements included in this Form 12b-25 regarding our financial performance and results of operations, in each case as expected to be reported, the ability to comply with the covenants under the Alta Mesa RBL, the outcome of the Alta Mesa RBL covenant relief, the ability to repay the borrowing base deficiency and other statements that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated, including the Company’s ability to comply with the documents governing its indebtedness. Factors that could cause actual results to differ materially from expected results include the results and finalization of the Company’s unaudited financial statements to be included in the Q2 2019 Form 10-Q, the ability to repay the borrowing base deficiency, the outcome of the Company's discussions with representatives of its lenders and those described under Risk Factors in the Company's most recent Form 10-K and other filings with the U.S. Securities and Exchange Commission.
Alta Mesa Holdings, LP
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | Alta Mesa Holdings, LP |
| | | By: Alta Mesa Holdings GP, LLC, its general partner |
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| Date: August 15, 2019 | | By: | /s/ John C. Regan |
| | | Name: | John C. Regan |
| | | Title: | Chief Financial Officer |
